life insurance needs analysis

Life Insurance Needs Life Insurance Needs AnalysisAnalysis

Converting Tough Small Sales IntoConverting Tough Small Sales IntoBIG Easy SalesBIG Easy Sales

Thomas R. Kestler, CFP, CLU, ChFCThomas R. Kestler, CFP, CLU, ChFC

Setting the StageSetting the Stage

Tell me about your current life insurance coverage.Tell me about your current life insurance coverage. X, Y, Z (Get access to the policies)X, Y, Z (Get access to the policies)

X X –– CoverageCoverage Y Y –– CostCost Z Z –– Cash ValueCash Value

Who are your beneficiaries? Are you sure?Who are your beneficiaries? Are you sure? How did you come up with the coverage amount?How did you come up with the coverage amount? Has anyone ever done a comprehensive insurance needs Has anyone ever done a comprehensive insurance needs

analysis for you?analysis for you?

Introduction to Needs AnalysisIntroduction to Needs Analysis

Immediate Cash NeedsImmediate Cash NeedsCollege NeedsCollege Needs Income for Surviving SpouseIncome for Surviving Spouse

Immediate Cash NeedsImmediate Cash Needs

Pay Off DebtsPay Off Debts Credit CardsCredit Cards Auto LoansAuto Loans Personal LoansPersonal Loans MortgageMortgage

Emergency Fund for Surviving SpouseEmergency Fund for Surviving Spouse 6 Months Combined Income6 Months Combined Income

Estate Settlement & Final ExpensesEstate Settlement & Final Expenses $10,000$10,000

College NeedsCollege Needs

College Cost in TodayCollege Cost in Today’’s Dollarss Dollars $10,000/yr$10,000/yr Time Till Freshman YearTime Till Freshman Year 8 yrs8 yrs Tuition Inflation RateTuition Inflation Rate 7%7% Year 1Year 1 $17,478$17,478 Year 2Year 2 $18,741$18,741 Year 3Year 3 $20,097$20,097 Year 4Year 4 $21,549$21,549

College NeedsCollege Needs

Assuming Investment Return of 8.00%Assuming Investment Return of 8.00% Lump Sum Needed Today to Provide for Future Lump Sum Needed Today to Provide for Future

Inflated Income StreamInflated Income Stream

$36,398

Income for Surviving SpouseIncome for Surviving Spouse

$

Time @ 65

Income From Surviving Spouse

SS Survivor

SS Retirement

Current Combined Income

Survivor Need

SummarySummary

Immediate Cash NeedsImmediate Cash Needs $$ College NeedsCollege Needs ++ $$$$ Income Needs for Surviving SpouseIncome Needs for Surviving Spouse ++ $$$$$$ Total NeedTotal Need == $$$$$$$$$$ Less Existing Life InsuranceLess Existing Life Insurance -- $$$$ Net Net NewNew Life Insurance NeedLife Insurance Need == $$$$$$$$

Perform

CPR

““Tell You WhatTell You What””

How about if I take these policies and gather the information to do a complete needs analysis for you and (spouse)? I’ll just need to gather a little more information and we can set up a time next week to go over the results.

“Does that make sense?”

Confidential Fact FinderConfidential Fact Finder

Income Needs for Jennifer at Income Needs for Jennifer at BlakeBlake’’s Deaths Death

Blake SummaryBlake Summary

Jennifer SummaryJennifer Summary

ComparisonComparison

30 Year Term Option30 Year Term Option

2,500,000 Blake2,500,000 Blake 1,000,000 Jennifer1,000,000 Jennifer 5,000 Children5,000 Children $3,970$3,970 Existing InsuranceExisting Insurance $3,500 $3,500 TotalTotal $7,470$7,470

UL OptionUL Option

2,500,000 Blake2,500,000 Blake 1,000,000 Jennifer1,000,000 Jennifer 5,000 Children5,000 Children $360,000 Retirement Income$360,000 Retirement Income Death Benefit for LifeDeath Benefit for Life TotalTotal $9,000$9,000

$127.50/Month Difference

First Year CommissionsFirst Year Commissions

TargetTarget $12,002.00 X 90% = $12,002.00 X 90% = $10,801.80$10,801.80 ExcessExcess $8,998.00 X 3% = $8,998.00 X 3% = $269.94$269.94 TotalTotal $11,071.74$11,071.74

New Money From HouseNew Money From House $5,500.00$5,500.00

Effective Commission PercentEffective Commission Percent 201%201%

Things to RememberThings to Remember

Use the Needs Analysis to calculate Use the Needs Analysis to calculate theirtheir insurance insurance needs needs –– NOT your NOT your ““guesstimateguesstimate”” –– They will be They will be more apt to buy if they understand where the more apt to buy if they understand where the numbers come fromnumbers come from

Always get health information and medications at Always get health information and medications at the first appointmentthe first appointment

Use cash values and premium from existing policiesUse cash values and premium from existing policies DonDon’’t try to keep coverage level for life t try to keep coverage level for life –– Use the Use the

flexibility of Universal Lifeflexibility of Universal Life

Things to Remember

Never show premium payments beyond age 65Never show premium payments beyond age 65 Always illustrate a retirement withdrawal scheduleAlways illustrate a retirement withdrawal schedule Never illustrate the exact insurance need calculated “Let me make a suggestion…”

Thank You!Thank You!

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